Educational loans are available from a variety of sources, allowing students and/or parents to borrow funds that can pay some or all college costs.
Loans must be repaid, with interest, usually after graduation. They will appear on your billing statement after your enrollment is confirmed, and you have completed the necessary promissory note and entrance interview.
First-time borrowers will be notified of the application process early in the summer, and do not need to complete anything until that time.
While the “best” loans are federal loans based on financial need, and require the annual completion of the Free Application for Federal Student Aid (FAFSA) there are programs for virtually every family, regardless of income. Many loans do not require repayment while the student is enrolled.
Interest Rates, 2020–2021 Academic Year
- 2.75% Undergraduate Direct Subsidized and Unsubsidized loans
- 4.30% Direct Unsubsidized Loans for graduate students
- 5.30% Parent PLUS loans for parent and graduate students
These rates are in effect for all Direct Loans with a first disbursement on or after July 1, 2020 and before July 1, 2021, and remain fixed for the life of the loan.
Interest Rates, general information
Rates are calculated using a base 10-year Treasury Note Index plus an add-on amount for each loan program—2.05% for Direct Subsidized and Unsubsidized Loans for undergraduate students, 3.60% for Direct Unsubsidized Loans for graduate and professional students, and 4.60% for parent and graduate PLUS.
Under the current interest rate structure, all Direct Loans except Direct Consolidation Loans will be “variable-fixed,” meaning students would receive a new rate with each new loan, but then that rate would be fixed for the life of the loan. There are also interest rate caps at 8.25% for Direct Subsidized and Unsubsidized Loans for undergraduate students, 9.50% for Direct Unsubsidized Loans for graduate and professional students; and 10.50% for parent and graduate PLUS.
- Wise management of your loan will establish a strong credit history.
- Borrow only the funds you need. You are not required to borrow the full amount shown on your Award Letter. See How Much to Borrow?
- If you decide to limit borrowing, consider that - in most cases - the most appealing loan is the subsidized Stafford, followed by the unsubsidized Stafford, followed by the Federal PLUS, followed by a private (non-federal) loan.
- If you need to borrow to cover special costs, complete the Loan Supplement and return it to the Office of Financial Aid.
- If you have to borrow an unsubsidized Stafford Loan, PLUS Loan or private (non-federal) loan, try to make at least interest payment while you are enrolled. What’s even better? Begin repaying principal and interest.
Keep copies of all loan documents in a single, well-marked folder. This will make them easy to find when questions arise.
To help insure all payments are made on time, consider setting up an automatic debit from your checking or savings account.